There are stark differences between private and public tendering, including transparency, range of budgets, and motivations.
Tendering is usually known as the process undertaken by governments in order to find a suitable organization to fulfill a large project before a certain deadline. They invite bidders to respond to a particular need (i.e. supply of goods and services) and eventually select the bidders offering the best value for their money.
Yet, private organizations often seek bidders to complete projects for them as well. While the tendering process largely stays the same, there are some key differences that distinguish it from public procurement.
Firstly, given that public sector organizations are run by a government entity, transactions must be easily visible to the public. Information — including financial statements — must be accessible and open to the public. This transparency also means that an equal opportunity is provided to entities bidding for those tender requests. This ensures that governments get the best deal for the lowest cost, as taxpayers’ money is being used.
In private tendering, transparency isn’t as concrete. While private companies still have to allow visibility into documents and statements, they don’t need to provide equal opportunity to all. So they can omit information if they desire to do so.
Secondly, there are differences in the range of budgets. Given that public tendering is often run by governmental entities, they are limited in the amount of money they can use to fund projects. This is why there may be tighter flexibilities on their ability to reconsider their budgets. This differs from the private sector, where there’s more flexibility with the budget.
Thirdly, there are different motivations that drive different values. As private entities focus on profit, they’ll base their decisions on driving revenue. This tends to result in less sustainable decision-making. On the contrary, as public tendering is in the public eye, money has to be spent wisely.
Next, regulations aren’t stringent in private tendering. While regulations related to laws for maintaining equality and staving off bribery are still rife in private tendering, there are fewer rules than in public tendering. Public bids are stringent in their regulations, oftentimes requiring fulfilled font type/size and formatting to be adhered to. On the contrary, as private entities are less rule-driven and don’t have to report as coherently, they have the freedom to create their own procurement rules. In line with regulatory restrictions, documentation procedures are vastly different as well. Private tenders tend to be easier to respond to as there are fewer forms to complete.
Lastly, the level of feedback differs between the two. During the process of public tendering, public sector bodies are obliged to provide valid reasoning for their choices and provide useful feedback to bidders. On the other hand, private companies do not have such an obligation — and can often be reluctant to offer an explanation.
Thus, this article boils down to one stark dissimilarity between private and public tendering. Rules, regulations, and regimentation. While private tendering isn’t as restricting, public tendering has more stakeholders to please and as such is limited in many aspects, including budget and free rein.
At Altura, our tendering platform allows users to see all past, current, and future public and private tenders. Keen to know more? Read more about Altura's features.